Least developed countries: Aid is still vital to combating poverty

Despite much talk of the private sector boosting growth to alleviate poverty, the UN Istanbul meeting on LDCs points up foreign aid as being of primary importance

The UN conference on least developed countries under way in Istanbul. Civil society groups fear it will be much harder to make headway in the next few years, after the 2008 financial meltdown. Photograph: Burhan Ozbilici/AP

Rich countries should make more determined efforts to fulfill and even increase aid commitments to the world's poorest countries, a UN conference will formally declare tomorrow.

Despite much talk of using the private sector as an engine of growth and a provider of jobs, the Istanbul programme of action makes clear how much the world's 48 least developed countries (LDCs) rely on foreign aid.

"While the least developed countries have made considerable efforts to mobilise domestic resources for their development, most of them still face a huge financing gap," says the 46-page action programme, "and ODA (official development assistance) continued to be the largest source of external financing for [their] development."

The fourth UN conference on LDCs has set an ambitious goal of halving their number in the next decade, although only three have "graduated" since LDCs were established as a category in 1971. With a population of 880 million, the LDCs represent the poorest and weakest group in the international community.

Ironically, some, such as Equatorial Guinea, would rather maintain their LDC status to retain aid and trade privileges.

The Istanbul conference met to consider progress among LDCs since the last plan of action set out in Brussels 10 years ago. Civil society groups fear it will be much harder to make headway in the next few years, at a time of continued global weakness after the 2008 financial meltdown.

"If the world was unable to implement the Brussels plan during the good years, how will it be possible after financial chaos in the lean years ahead. It will be an enormously testing time for LDCs," said Barry Coates, executive director of Oxfam, New Zealand, who is attending the Istanbul conference.

The US said ODA flows increased from $12bn to $38bn between 2001 and 2008, "but delivery was modest compared to least developed countries' structural constraints, multiple vulnerabilities and needs".

The Istanbul declaration will send an unequivocal message to donors for them to meet and exceed current aid targets. "There is a clear need for much more determined efforts by developed countries to fulfil and, where possible, enhance their ODA commitments to least developed countries," the UN said.

The conference said donor countries providing more than 0.20% of their GNP as official aid to LDCs should continue to do so and maximise their efforts to further increase aid levels. As for those donors who have met the 0.15% target, they should undertake to reach 0.20% "expeditiously".

All other donor countries that have committed themselves to the 0.15% target should reaffirm their commitment and undertake to achieve the target by 2015 or to "make their best efforts to accelerate their endeavours to reach the target".

Coates, however, was sceptical that donor countries would pay much attention to what comes out of Istanbul. "The LDCs are bearing the brunt of crises they did not cause – from financial and food speculation, climate change and water scarcity," he said. "It is deeply disappointing that the developed nations failed to agree anything tangible to prevent these crises and protect LDCs from the consequences, other than more of the promises to meet aid targets that they have broken repeatedly in the past 30 years. Unfortunately, the urging of countries to boost their aid is all too familiar. Broken promises are the norm."

Dede Ahoefa Ekoue, Togo's minister for planning and development, liked the conference's emphasis on investment and the productive sectors. "Our minds now are on how to get private investment coming from outside ... We think that has the foundation to help us move on the economic front," she said.

"I heard many speakers in the plenary sessions talk about investing in LDCs, not just for the LDCs themselves but as a way of boosting all economies. That signals the way forward – there are lot of under-exploited opportunities."

As for aid levels, Ekoue said just as important was the quality of the aid and how it should be used to leverage investment and economic growth. While admitting the audacity of wanting to halve the number of LDCs, she said: "It will energise us and put pressure on us to move forward."

Achieving that goal will be a tall order, as the conference pointed out the lack of movement in the past decade. "While the Brussels programme of action has had a positive role to play in the development process of the least developed countries … the improved economic performance in some least developed countries had a limited impact on employment creation and poverty reduction. In many least developed countries structural transformation was very limited, and their vulnerability to external shocks has not been reduced."

The conference said progress has been made towards fulfilling commitments on duty-free, quota-free market access for products originating in LDCs, but other serious obstacles to trade remain, including non-tariff barriers that are inconsistent with World Trade Organisation rules and obligations.

As expected, the conference called for substantial efforts for an early and successful conclusion of the Doha trade round, which has staggered on for about 10 years.

Turkey said this UN conference on LDCs would differ from past ones because of an emphasis on the private sector – which was described as key to sustainable development – and on monitoring mechanisms, which would be done through various UN bodies.

Aid to LDCs

Increasing aid to the world's 48 least developed countries (LDCs) is a key target of millennium development goal 8, which aims to "develop a global partnership for development".

And under the 2001 Brussels programme of action, the world's top aid donors agreed to give between 0.15% and 0.20% of gross national income in aid to LDCs by 2010.